Rather then try and explain the reasoning for this device myself, I'm reminded of a Tweet from Modaco founder Paul O'Brien from a few days ago regading the HTC Pico as it's more commonly known as:
HTC's assault on ultra low priced Android is coming... expect the HTC Pico to be announced very soon!
We're now getting a look at the low priced HTC Explorer. Expectations for this one obviously shouldn't be set too high. With rumored specs such as a 600MHz processor, 3.2-inch HVGA display with a 5MP camera all powered by Android 2.3 and made pretty by Sense 3,5 it's hard to imagine anyone buying a feature phone when something like this will soon be available. Needless to say, we're expecting an announcement to be coming shortly.